Gold Expected To Rise Due To Lower Inflation Numbers

Here is why we think gold prices will go up

(FUNDAMENTAL ANALYSIS)

Lower Core Inflation Numbers and Potential Fed Rate Cuts:

• The recent core inflation report came in weaker than expected, signaling a sluggish economy in the United States. This unexpected weakness has raised speculation that the Federal Reserve may consider cutting interest rates to stimulate economic growth.
  

Impact of Weak Core Prices:

• Weak core prices provide the Federal Reserve with greater rationale to implement interest rate cuts. Lower interest rates typically weaken the dollar as they make dollar-denominated assets less attractive relative to other currencies. Consequently, a weakened dollar often leads to upward pressure on gold prices.
  

Potential Fed Policy Response:

• In response to concerns over weak core prices, the Federal Reserve may contemplate lowering interest rates to stimulate economic activity. By reducing borrowing costs, lower interest rates can encourage consumer spending and investment, thereby bolstering economic growth. However, this policy action tends to weaken the dollar, which can benefit gold prices.
  

Gold as a Safe-Haven Asset:

• Gold is often viewed as a safe haven asset during times of economic uncertainty and inflation. The prospect of interest rate cuts by the Federal Reserve can further enhance gold's appeal, as lower interest rates typically diminish the opportunity cost of holding non-yielding assets like gold and signal a upcoming recession.
  

Here is what to watch out for that might stop it from going up:

Market Response and Federal Reserve Policy Decisions:

• Market participants should closely monitor any signals or announcements from the Federal Reserve regarding interest rate decisions, as they can significantly influence investor sentiment and, consequently, gold prices. For example if inflation rises, it becomes more likely for the Federal Reserve to not cut
  rates, well expect gold prices to plummet.
  

Economic Indicators and Geopolitical Developments:

• It's important to stay attuned to key economic indicators, central bank policies, and geopolitical developments that could impact gold markets. Any shifts in these factors could alter the trajectory of gold prices.
  

(TECHNICAL ANALYSIS)

Trade setup explained:

Take-Profit: is set at 2426 due to a strong area there ( see green line )

Stop-Loss: is set at 2338 which is right under 2344, 2344 has been showing stronger support.

Conclusion:

The prospect of interest rate cuts by the Federal Reserve, driven by concerns over weak core prices, has contributed to upward pressure on gold prices. As lower interest rates tend to weaken the dollar, gold becomes more attractive as a safe-haven asset, thus supporting its price. However, market participants should remain vigilant and adapt their strategies in response to evolving economic conditions and policy decisions.

Like always use proper risk-management.


Greetings,

Zila

Trade closed: target reached:

TAKE PROFIT 550 PIPS